Tehran, Ashgabat take gas dispute to IAC

Iran and Turkmenistan are seeking arbitration for their long-standing dispute over late payments for natural gas supplies.

Hamidreza Araghi, the managing director of National Iranian Gas Co. (NIGC), informed Iran Students News Agency (ISNA) on August 6 that the parties had brought the case to the International Court of Arbitration. After failing to resolve the matter through negotiations, the two sides have agreed to accept binding arbitration, he explained.

Tehran and Ashgabat have both "handed over documents and have selected their arbitrators," said Araghi, who also serves as Iran’s deputy oil minister. Now, he remarked, "[the] case awaits the final decision of the court."

He went on to say that ICA’s next step would be to examine the claims of the two parties to the suit. But he did not comment further on the matter.

Turkmenistan and Iran have been at odds over gas payments for more than a decade. They began sparring during the heating season of 2007-2008, when the former country’s national gas concern Turkmengaz hiked the price of deliveries to the latter from the previously agreed rate of US$40 per 1,000 cubic metres to US$360 per 1,000 cubic metres. At the time, Iranian officials complained that Turkmengaz was taking advantage of gas shortages during a cold winter.

The parties did seek to negotiate a settlement but were unable to resolve the dispute, and Turkmenistan declared in late 2016 that it was gearing up to halt gas shipments. It justified this move by claiming that Iran had accumulated debts of US$1.5-1.8 billion, while officials in Tehran declared that the arrears had already been paid in full. Nevertheless Turkmengaz halted shipments on January 1, 2017.

Talks between the two sides continued afterwards, and Araghi said late last year that Tehran was keen to settle the matter without resorting to arbitration. Nevertheless, Turkmengaz began legal proceedings in the ICA in December 2017, and the NIGC filed a counter-claim shortly thereafter. The Iranian company said it wanted compensation from Ashgabat for the suspension of deliveries without adequate notice, for unfair pricing practices and for the low quality of previous shipments of gas.